“Microsoft Corp. estimates it lost about $14 billion last year to software piracy — and those may prove to be the most lucrative sales never made,” Charles Piller reports for the Los Angeles Times. “Although the world’s largest software maker spends millions of dollars annually to combat illegal copying and distribution of its products, critics allege — and Microsoft acknowledges — that piracy sometimes helps the company establish itself in emerging markets and fend off threats from free open-source programs.”
Piller reports, “The proliferation of pirated copies nevertheless establishes Microsoft products — particularly Windows and Office — as the software standard. As economies mature and flourish and people and companies begin buying legitimate versions, they usually buy Microsoft because most others already use it. It’s called the network effect. ‘The first dose is free,’ said Hal Varian, a professor of information management at UC Berkeley, facetiously comparing Microsoft’s anti-piracy policy to street-corner marketing of illicit drugs. ‘Once you start using a product, you keep using it.'”
Piller reports, “Of course, Microsoft executives prefer that people buy, but theft can build market share more quickly, as company co-founder and Chairman Bill Gates acknowledged in an unguarded moment in 1998. ‘Although about 3 million computers get sold every year in China, people don’t pay for the software. Someday they will, though,’ Gates told an audience at the University of Washington. ‘And as long as they’re going to steal it, we want them to steal ours. They’ll get sort of addicted, and then we’ll somehow figure out how to collect sometime in the next decade.'”
“Microsoft’s public posture on piracy is one of zero tolerance,” Piller reports. “Microsoft has cut pragmatic deals to convert institutional piracy into standard sales. Instead of suing, it asks organizations found to use illicit copies to replace them with licensed, paid versions. Microsoft wares become entrenched without competitive bidding, via piracy, and formal forgiveness cements the commercial relationship. Microsoft declined to comment on how often it uses this approach.”
Full article here.
[Thanks to MacDailyNews Reader “Wade” for the heads up.]
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